Sometimes we read the newspaper section by section and keep each section's topic separate in our minds. That's often fair enough -- the New England Patriots' last game probably doesn't have much to do with the latest Doonesbury cartoon. But many times, stories overlap.
For example, the national section and the business section collide when it comes to military reserves. According to a recent Inc. magazine article, "The Department of Defense's dramatic increase in the use of military reserves is not only taking its toll on military families, but it also is having a detrimental effect on small businesses."
The article cited a May study by the Congressional Budget Office (CBO), which found that "small businesses and self-employed reservists are the most likely to be severely affected by the vacancies caused by the increased frequency and duration of reservist activations." Apparently, nearly 20% of all civilian reservists work for small businesses. As many as 10% or more are self-employed or hold "key positions" in small businesses. It's not hard to imagine that such businesses must be struggling or languishing with these critical people away. (I didn't realize this, but reservists typically get just two weeks' notice, and sometimes less time, before they must deploy.)
This might not seem like a critical investing issue for those of us who don't invest in extremely small companies. But remember, almost every big, successful company we know today began as someone's small business. If Steve Jobs or Stephen Wozniak had been away from Apple
Reservists are guaranteed employment upon their return, but this doesn't make things any easier for the businesses. The CBO, therefore, has recommended relief measures such as compensating businesses through tax credits or direct payments, subsidizing loans to employers, providing call-up insurance for businesses, or exempting certain reservists from call-ups.
If you're thinking about investing in a small business, it might be smart to look into the military ties its employees have and how the war in Iraq is affecting the business.
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